War, insurance, and the limits of protection amid India-Pakistan tensions

This exclusion is not hidden in fine print; it is a foundational clause in nearly every policy. As highlighted by the Insurance Brokers Association of India, the “war exclusion” applies to civilians and military personnel alike, barring claims for losses or deaths caused by war, invasions, hostilities, or similar military operations. Even if a policy is active and all premiums are paid, if the loss is traced to a war-related event, insurers have clear grounds to deny the claim. This is true for property insurance as well: if a home or business is damaged by cross-border strikes or military action, the insurer will classify it under the war exclusion and reject the claim, regardless of the intensity of the conflict or the proximity to the border.

Jurisprudence upholds it

Recent judicial pronouncements reinforce the primacy of these exclusion clauses. For example, the Supreme Court has held that while insurers cannot enforce impossible conditions to deny claims, exclusion clauses such as those for war are generally upheld as long as they are clear and not contrary to public policy.

In the case of Simplex Concrete Piles (India) Ltd v. Union of India, the Delhi High Court analysed whether a contractual clause could completely exclude liability for damages, ultimately recognising the validity of clear exclusionary clauses under Indian contract law. These rulings underscore that, unless a clause is impossible to comply with or violates statutory provisions, courts are likely to enforce exclusions as written.

Insurers distinguish between terrorism and war

When conflict erupts or tensions simmer between India and Pakistan, the question of whether insurance will offer any solace for losses to property, life, or business assets becomes sharply relevant. The recent Pahalgam terror attack in Jammu and Kashmir in April 2025, which tragically claimed 26 lives, brought this issue into public focus. In the aftermath, families of the victims saw their life insurance claims processed swiftly by companies like LIC and Bajaj Allianz Life, with insurers even relaxing documentation requirements to provide timely support.

This responsiveness, however, highlights a crucial distinction in the world of insurance: terrorism and war are not the same in the eyes of policy contracts.

In the Pahalgam incident, the attack was classified as terrorism, not an act of war. Most standard life insurance policies in India do not exclude terrorism unless specifically stated, so claims were honoured. Insurers, in fact, went the extra mile, with some settling claims within hours and others prioritising affected families for faster payouts. Yet, this compassion is not extended to losses caused by war or war-like operations. Standard insurance policies—whether covering homes, businesses, or lives—almost universally contain a “war exclusion” clause. This clause explicitly states that losses or damages caused by war, invasion, hostilities, or military operations are not covered, regardless of whether the policyholder is a civilian or military personnel.

In a global context, the UK Court of Appeal’s 2023 decision in University of Exeter v. Allianz Insurance PLC is instructive. The court denied a claim for damages caused by a controlled detonation of a World War II bomb, ruling that the original act of war remained the proximate cause, thus triggering the policy’s war exclusion even eight decades later.

The view of the insurance industry

The insurance industry’s rationale is straightforward: war brings with it the risk of catastrophic, widespread losses that are impossible to price or pool. Insurers simply cannot absorb the financial shock of war-related destruction, so they exclude it from standard policies.

While some specialised sectors like shipping or aviation may negotiate bespoke war-risk coverage at high premiums, these are exceptions, not the rule. For most people and businesses, standard policies will not pay out for losses caused by military conflict, cross-border shelling, or any act deemed an act of war.

The aftermath of Pahalgam also saw insurers reassessing risks in volatile regions, with some considering higher premiums or stricter requirements for projects in conflict-prone areas. This underscores the insurance industry’s constant balancing act: offering coverage for calculable risks, while drawing a firm line at the chaos of war. Terrorism, depending on policy wording, may be covered, but war is almost always excluded. For those living or operating near conflict zones, the only real safeguard remains peace and diplomacy—not a policy document. Judicial precedents and industry practice both make it clear: when it comes to war, insurance is not the answer.

(Anjali Jain, Partner and Appekshya Suhag, Managing Associate at Areness Law.)

Views are personal and do not represent the stand of this publication.